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Obama's Health Tax -- on the Middle Class By: Dick Morris
FrontPageMagazine.com | Tuesday, September 22, 2009

The elderly were the first group to turn against Obama's health care proposals, alienated by the huge $500 billion cut in Medicare in his plan. Now the young and the uninsured may be the next demographic group to jump ship, concerned about the huge premiums they will be required to pay for health insurance.

The requirement that everybody buy health insurance will impose a massive tax on all who now are uninsured. The Congressional Budget Office projects that the middle income uninsured will have to pay an average of more than 15 percent of their income in premiums, deductibles and co-payments under the plan.

For the poor, there will still be Medicaid. But for those individuals earning more, the required premium payments will be worse than any tax increase. For example, the Congressional Budget Office estimates that when the program is fully implemented — by 2016 — an individual earning $32,400 a year would have to pay $4,100 of his income in premiums before getting any subsidy. The CBO projects that, with deductibles and co-payments, he'd have to shell out $5,600 annually or 17.3 percent of his income. A family of four making $80,000 a year would have to pay about $10,500 in premiums alone. With deductibles and co-payments, it could rise to $15,000, or just under 20 percent.

And if they don't buy health insurance, they will face federal fines that begin to approach these same premium levels. They won't be able to buy what they truly need — catastrophic insurance at a lower premium — because that won't satisfy the mandate in the program.

The young and uninsured are going to catch onto what this bill is all about. In two sentences: It is designed to make healthy people who don't have health insurance — and may neither need nor want it — to buy it nevertheless in order to use their premiums to subsidize those who need it.

And it cuts Medicare to help subsidize their premiums.

Obama has pledged only to increase taxes on the rich. But his program, essentially, taxes the core of the middle class (those making between $30,000 and $80,000 a year). It will require them to buy not the policy they need or want, but to overpay in order to pick up the slack for others who need the extra coverage.

Just as cap-and-trade is a carbon tax in disguise, so health care reform is a health care tax dressed up as a program to cover the uninsured.

But it is now clear that, with the Sen. Max Baucus Bill, the debate moves over to Obama's left flank, as the required payments on the uninsured rise. Ron Wyden, D-Ore., a certified liberal, put it nicely: "It's very clear that the driving issue of this debate is affordability, particularly for middle-class folks. And the Democratic caucus is very much committed to getting this issue right."

If the Democrats raise the subsidies to the uninsured to lower these premium payments, they will end up in a box of their own making. No matter how they get the money, they offend supporters that they need to pass the bill:

a) If they get the money from more Medicare cuts, they alienate the elderly still further;

b) If they get it from raising the deficit, they lose moderates;

c) If they increase taxes to do it, they lose blue dogs;

d) And if they don't increase the subsidies, they lose the uninsured themselves.

Having the uninsured themselves — the stated object of Obama's compassion — turn against the program would be the unkindest and most lethal cut of all.

Dick Morris is a former adviser to President Clinton. To get all his columns e-mailed to you, register for free at DickMorris.com.

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